Abstract
LL.M. (Commercial Law)
As a matter of international best practice, the proper regulation of the distribution by a company of its assets to or in favour of its shareholders is central to the protection of the interests of a company’s creditors and minority shareholders. This dissertation analyses whether the delimitation of the “incurrence of a debt or obligation” as a form of distribution under the Companies Act No. 71 of 2008 (SA Companies Act) and the restriction thereof under section 46 adequately safeguards these parties as interested stakeholders of the company.
In so doing, it evaluates the relevant sections of the SA Companies Act against the analogous provisions of the New Zealand Companies No. 105 of 1993 and Model Business Corporation Act of the United States of America. Through a comparative study, this dissertation was able to distil key legislative shortcomings under the SA Companies Act that create confusion or irregularities that could potentially undermine the statute’s ability to shield creditors’ rights and keep minority shareholders from being disadvantaged by disproportionate payments within a single class or amongst different classes of shareholders.
The identification of statutory frailties will allow this dissertation to, by way of conclusion, propose suitable legislative amendments which the author believes will reform the SA Companies Act to the extent necessary to ensure that a distribution by way of the incurrence of a debt or obligation cannot undermine the interests of either creditors or minority shareholders.